In Pakistan, "We've Come a Long Way"

February 12, 2003

Q: Foreign debt pressures have eased, but domestic debt is still on the rise. What's your strategy to combat domestic debt?

A: Both foreign and domestic debt growth have been contained. Naturally if you're running deficits, debt is growing. But we have managed single-digit interest rates. That was essential because 65% of our revenues were going to service debt. Now the number is in the 40s. It's still high, but we'll keep working on it.

Being fiscally responsible is important for improving investment. The debt situation is much better.... We're not against borrowing -- borrowing for development is healthy. But we have told the International Monetary Fund that hopefully this will be our last IMF program.... We've also created for the first time the Pakistan Debt Office in the Ministry of Finance, which will be the main center for developing debt strategy.

Q: But the biggest component of Pakistan's domestic debt is the government-run National Savings Scheme (NSS). Despite falling interest rates, there has been no slowdown in the money being put into the NSS. How do plan on tackling this aspect of the domestic debt situation?

A: The NSS is merely a reflection of a certain investor class feeling comfortable with